In one of the largest partnering deals of the year, Lundbeck and Otsuka have entered into a long-term agreement for the development and commercialization of up to five innovative psychiatric and neuroscience products worldwide.
Shares in Lundbeck respnded by jumping over 6% in trading on Friday. In turn, Otsuka’s shares also increased by nearly 2%, indicating that investors on both sides of the deal broadly welcomed the alliance.
The agreement covers up to five early and late stage compounds in development. The two late stage compounds are from Otsuka: aripiprazole depot formulation and OPC-34712. Otsuka receives the rights to enter into co-development, and eventual co-promotion following approval, of up to three compounds after Phase IIb clinical trials.
The alliance is a sales and cost share agreement. Under the terms of the agreement, Lundbeck will make an upfront payment upon signing of USD 200 million. Otsuka will in total receive up to approximately USD 1.4 billion from Lundbeck as upfront payment and development and regulatory milestone payments. With the addition of sales milestones in connection, Lundbeck will pay up to approximately USD 1.8 billion to Otsuka. Both companies will share the sales and development and commercialization costs based on the agreement.
For aripiprazole depot formulation, Lundbeck will receive 50% of net sales in Europe (EU5 and the 4 Nordic countries) and Canada and 20% of net sales in the U.S. from Otsuka. The cost incurred for the development and promotion will be shared in the same ratio. Otsuka holds the rights in many of the Asian countries including Japan, as well as Turkey and Egypt. For the remaining markets in the Lundbeck territories, Lundbeck will market the compound and Otsuka will supply the bulk product at a price of agreed percentage of the sales.
For OPC-34712, Lundbeck will receive 50% of net sales in Europe (EU5 and the 4 Nordic countries) and Canada and 45% of net sales in the U.S. from Otsuka. The cost incurred for the promotion will be shared in the same ratio. Otsuka holds the rights in many of the Asian countries including Japan, as well as Turkey and Egypt. For the remaining markets in the Lundbeck territories, Lundbeck will market the compound, and Otsuka will supply the bulk product at a price of agreed percentage of the sales. For the development costs of OPC-34712, Otsuka will be responsible up to certain amount and equally share the costs afterwards.
In co-commercialization countries, the parties will share sales efforts and costs in accordance with the territory split. In the U.S., Canada, EU5 and the 4 Nordic countries, Otsuka will book all sales. In the rest of Europe and the world, excluding many of the Asian countries, as well as Turkey and Egypt, Lundbeck will book all sales and take full responsibility for commercialization. Otsuka will retain the rights to participate in the co-development and co-marketing when it establishes a sales organization in Lundbeck’s territory.
“We are very pleased to have entered into this collaboration with Otsuka,” said Ulf Wiinberg, President & Chief Executive Officer, Lundbeck. “With the addition of aripiprazole depot formulation and OPC-34712, Lundbeck has significantly broadened its growing psychiatry portfolio with an exciting and unique potential treatment in an area of high unmet need. This collaboration allows us to be introduced to the U.S. psychiatry community as soon as 2013.”
“We are very excited that Otsuka and Lundbeck have entered into a co-development and co-commercialization agreement for aripiprazole depot formulation and OPC-34712, both potential key drivers of future growth for Otsuka’s CNS business,” said Dr. Taro Iwamoto, President and Representative Director, Otsuka Pharmaceutical Co., Ltd. “Lundbeck’s expertise in developing depression and anxiety treatments and Otsuka’s expertise in developing anti-psychotics will maximize the medical and commercial value of Otsuka’s portfolio in CNS. In addition, our partnership with Lundbeck will enable us to establish a strong platform to deliver these compounds to patients who need them in Europe, South America, Oceania3, BRICs4 and around the world. Our collaboration will lead to the next generation of innovation by co-developing Lundbeck’s three new compounds.”
This deal opens a significant new revenue opportunity for Lundbeck. Its primary source of income to date comes from Cipralex, sold as Lexapro in the US by itsd partner, Forest Labs.
The company has long been seeking new revenue streams to replace patent expiries in the next few years.
Watch this space for additional deals as Lundbeck seeks to secure future revenue growth prospects.
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